BDCs: High Yield, High Risk, Or Both?

Statistically, BDCs often look very attractive. Dividend yields often average 7% or better, earnings yields are also high because valuations appear low. But with BDCs statistics are not always what they appear to be on the surface. In theory, BDCs should perform very well when interest rates are declining as they have been for the past several years. However, many have not. Additionally, their dividend distributions are not fully qualified like regular companies. Investors often are paying taxes based on their ordinary income rates. There are also many risks to consider before investing in BDCs. The credit risks of the companies they invested, the amount of leverage they carry, the future direction of interest rates are just a few. However, in the video, I will be showcasing 3 BDCs that prudent income-oriented investors could consider. I will also highlight some of the pitfalls of investing in BDCs that appear attractive, but all is not what meets the eye.

FAST Graphs Analyze Out Loud Reviewing Prospect Capital (PSEC), Apollo Investment (AINV), Sixth Street Specialty Lending (TSLX), Ares Capital (ARCC), Main Street Capital (MAIN).

Disclosure: No positions

Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks ...

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